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As you are aware, under paragraph 3 of IT-114, a discount will be considered to be interest if: a) the discount arose on the original issue of the obligation, and b) the debt was either a non-interest bearing obligation or carried an interest rate substantially lower than the market rate. ... Accordingly, the entire amount of the discount would be considered to be interest pursuant to the criteria in IT-114. ...

Pco will file an election under subsection 256(9) of the Act whereupon that subsection would not apply and control of Pco would be considered to have been acquired at 1:00 P.M. on day 1. 5. ... The comments expressed are not advance income tax rulings and are not considered binding on the Department, in respect of any taxpayer, in accordance with paragraph 21 of Information Circular 70-6R2 dated September 28, 1990. ...

Subparagraph 6202.1(1)(a)(ii) of the Regulations This subparagraph provides that a new share of the capital stock of a corporation is a prescribed share if, at the time it is issued, under the terms or conditions of the share or any agreement in respect of the share or its issue (ii) the amount that the holder of the share is entitled to receive in respect of the share on the dissolution, liquidation or winding-up of the corporation, on a reduction of the paid-up capital of the share or on the redemption, acquisition or cancellation of the share by the corporation or by specified persons in relation to the corporation (in this section referred to as the "liquidation entitlement") may reasonably be considered to be, by way of a formula or otherwise, fixed, limited to a maximum or established to be not less than a minimum. ... XXX, we are inclined to the view that the purchase price of the FTS determined at the time of the sale under the above circumstances would not be an amount that may, by way of a formula or otherwise, reasonably be considered to be fixed or limited to a maximum. ...

In essence, you query whether the Department intends to apply the law as it is written with regard to the withholding of tax and other amounts required under the Income Tax Act on certain payments to non-residents in respect of the hire of ships in situations where either A) the non-resident is performing services in Canada and is considered to carry on business in Canada for purposes of paragraph 2(3)(b) of the Act; or B) the non-resident is in receipt of rent for the hire of a ship within the meaning of paragraph 212(1)(d) of the Act. The answer in both cases is that the law must be applied as it is written and in accordance with the principles established by jurisprudence unless, in the considered judgment of the Department, mitigating circumstances dictate that a strict application of the law is not warranted due to a lack of potential tax recovery. ...

In our opinion, section 253 of the Act is principally directed at determining where a business is to be considered to be carried on (i.e. in Canada) rather than whether a business is carried on. ... However, while not in and of itself determinative, whether there is a reasonable expectation of profit will be a factor to be considered in determining whether there is a business. ...

Where there is an expressed intention to develop land and subdivide it into lots for future sale, as in your example, the land is likely to be considered as inventory. ... Subsection 245(4) provides that the rule in subsection 245(2) does not apply to a transaction where it may reasonable be considered that the transaction would not result directly or indirectly in a misuse of the provision of the Act or an abuse having regard to the provisions of the Act read as a whole. ...

The issues which we have considered and our comments in respect thereof are set out below. ... Comment In the above hypothetical situation, before the Partnership is dissolved, the Majority Partner, by reason of his voting entitlement, controls the Partnership, which in turn controls Amalco, with the result that the Majority Partner is also considered to control Amalco (see Vineland Quarries). ...

In addition, as you suggested, the advance of funds to a corporation can only be considered a contribution of capital if they are made by persons who are shareholders. ... In the situation we are concerned with, the Taxpayers do not appear to have acquired any property as a result of the outlay so the payments could be considered to fall under paragraph 40(1)(a)(i). ...

Our comments We have considered this matter in depth and it is our opinion that for the purposes of the Act other than subdivision b of Division B thereof, the expression “income from property” should be given its ordinary meaning. ... Such income was considered as income from property in its ordinary sense, with the annuity contract being regarded as the property- the source of the income. ...

As such the interim rental operation would not be considered a business so paragraph 149.1(3)(a) of the Act would not apply. b) that the fact that a management firm has been engaged to manage this interim rental operation would not cause any income tax concerns and the requirements that substantially all people employed by the charity in carrying on the endeavour not be remunerated will not apply. c) that although the Foundation has acquired control of a corporation, this corporation is a bare trustee corporation with no assets, liabilities or sources of revenue on its own behalf, and the properties registered in its name are held by it in trust for their beneficial owner, the Foundation. ... In order for the rental income to be considered as producing property income the services provided by the landlord must be of very limited nature, basic and incidental to the tenant's occupation of the premises. ...